working either from home or in different places from the central office

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Teleworking

working using a telephone and a computer at home, in an internet cafe or train or plane

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Occupational Segregation

the dominance of an occupation by one gender

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Tax Wedge

the gap between what employers pay for labour and what workers recieve in disposable income

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Outsourcing

subcontracting part of production process to another firm

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Offshoring

transferring part of the process to another country, the production may be outsourced or may be undertaken by another firm in a dif country

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Monopoly

a single seller

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Market Concentration Ratio

the % share of the market of a given number of firms

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Short Run

the time period when at least one factor of production, usually capital, is in fixed supply

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Fixed Costs

costs that do not change in the SR with changes in output

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Variable Costs

costs that change with changes in output

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Average Cost

total cost / output (also called unit cost)

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Average Fixed Cost

total fixed cost / output

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Av Variable Cost

av v cost / output

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Marginal Cost

the change in total cost resulting from changing output by one unit

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Long Run

the period of time when it is possible to alter all factors of production

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Economy of Scale

a reduction in LR AC resulting from an increase in the scale of production

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Diseconomy of Scale

an increase in LR AC caused by an increase in the scale of production

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Minimum Efficient Scale

the lowest level of output at which full advantage can be ttaken of economies of scale

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Constant Returns to Scale

LR AC remaining unchanged when the scale of production increases

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Internal Economics of Scale

EoS that occur within the firm as a result of its growth

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External Economies of Scale

economies of scale that result from the growth of an industry and benefit firms within the industry

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Internal DEoS

diseconomies oS experienced by a firm caused by its growth

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External DEoS

diseconomies oS resulting from the growth of the industry, affecting firms within the industry

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Average Revenue

total revenue / output

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Marginal Revenue

the change in total revenue resulting in sale of one more unit

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Perfect Competition

a market structure with many buyers and sellers, free entry + exit and identical prouct

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Price Taker

a firm that has no influence on price

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Price Maker

a firm that influences price when it changes its output

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Unit Elasticity of Demand

when a given % change in price causes and equal % change in demand, leaving total revenure unchanged

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Predatory Pricing

setting price low with the aim of forcing rivals out the market

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Superior Good

a good with positive income elasticity of demand greater than 1

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Barriers to Entry

obstacles to new firms entering a market

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Barriers to Exit

obstacles to firms leaving a market

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Sunk Costs

costs incurred by a firm that it cannot recover should it leave the market

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Limit Pricing

setting a price low to discourage the entry of new firms into the market

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Profit Maximisation

achieving the highest possible profit where MC=MR

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Supernormal Profit

profit earned where AR>AC

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Normal Profit

the level of profit needed to keep a firm in the market in the long run

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Natural Monopoly

a market where LRAC are lowest when output is produced by one firm

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Legal Monopoly

a market where a firm has a share of 25% or more

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Dominant Monopoly

a market where a firm has a 40% or more share

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Oligopoly

a market structure dominated by a few large firms

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Kinked Demand Curve

a demand curve made up of 2 parts; suggest oligopolists follow each others price reductions but not price rises

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Cartel

a group of firms that produce seperately but sell at one agreed price

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Game Theory

a theory of how decision makers are influenced by the actions and reactions of others

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Contestable Market

a market in which there are no barriers to entry or exit and the costs facing incumbent and new firms are equal

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Hit-and-Run Competition

firms quickly entering a market when there are supernormal profits and leaving it when the profits disappear

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Sales Revenue Maximisation

the objective of achieving as high a total revenue as possible

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Growth Maximisation

the objective of increasing the size of the firm as much as possible

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Profit Satisficing

aiming for a satisfactory level of profit rather than the highest level of profit

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Stakeholders

people affected by the activities of a firm

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Utility Maximisation

the aim of trying to achieve as much satisfaction as possible

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Derived Demand

demand for one item depending on the demand for another item

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MRP

(marginal revenue product) the change in a firms revenue resulting fro employing one more worker

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MPL

(marginal product of labour) the change in output that results from employing one more worker. MPxMR

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Flexible Labour Market

a labour market that adjusts quickly and smoothly to changes in the demand for and supply of labour

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Backward-Sloping Labour Supply Curve

a labour supply curve showing the substitution effect dominating at low wages and the income effect dominating at high wages

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Income Effect of a Wage Rise

the effect on the supply of labour caused by the change in the ability to buy leisure

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Substitution Effect

the effect on the supply of labour caused by a change in the opportunity cost of leisure

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Elasticity of Supply of Labour

the responsiveness of the supply of labour to a change in the wage rate

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Human Capital

the skills, knowledge and experience that workers possess

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Economic Rent

a surplus paid to a factor of production above what is needed to keep it in its current occupation

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Transfer Earnings

the amount of factor of production could earn in its best alternative occupation; the minimum amount that has to be paid to ensure that a worker stays in her/his present job: if her/his wage falls below this level s/he will transfer to the alernative

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Monopsonist

a single buyer

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Oligopsonist

one of a few dominant buyers

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Bilateral Monopoly

a market with a single buyer and seller

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Disequilibrium Unemployment

unemployment caused by the AS of labour exceeding AD of labour

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Equilibrium Unemployment

unemployment that exists when the labour market is in equilibrium

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Non-accelerating inflation rate of unemployment (NAIRU)

NAIRU the level of unemployment that exists when the labour market is in equilibrium

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Geographical immobility of labour

barriers to the movement of workers between different areas

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Occupational immobility of labour

barriers to workers changing occupations

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Gini Coefficient

used to make international comparisons of income inequality, found by using lorenz curve

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Lorenz Curve

a diagram commonly used to illustrate income or wealth distribution

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Absolute Poverty

the inability to purchase the basic necessities of life

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Relative Poverty

a situation of being poor relative to others

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Dependancy Ratio

proportion of the population who are too young, too old or too sick to work and so who are reliant on the ouput of those who are working